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Politics & Government

BASD Might Hire Portnoff to Collect Delinquent Tax

Directors considering whether a change in collection tactics will help the bottom line.

School board directors rejected the idea of immediately hiring law firm Portnoff and Associates to take on collections of delinquent real estate taxes owed to the Bethlehem Area School District.

Instead it directed the administration to take bids for similar services and further investigate whether a change from current collection practices would benefit the district's bottom line.

Board members made the decision after hearing a presentation from firm owner Michelle Portnoff, who said her firm could increase the district rate of collection of delinquent taxes 17 to 50 percent in the next 60 days, perhaps as much as $500,000.

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“I fail to see the urgency here. As of January, we've collected 11 percent more than all of last year,” Director Benjamin Tenaglia told board secretary Stacy Gober at the board's finance committee meeting Monday evening. He noted that the Portnoff firm is the only one contacted so far, and the district has not bid advertisement for others.

“And yet I see this vendor is up for a decision in two weeks time. This is the presentation that should have been made to this board before a professional was asked to make a presentation,” he said.

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Gober estimated between 94 and 96 percent of the district's property taxes are collected on time, but the small percentage of uncollected taxes was about $3.38 million in the 2009-2010 school year, of which about $692,000 has been collected. Approximately $4.8 million is delinquent from the current school year, officials said.

Currently, the district remands unpaid tax bills for collection through the county. When the money is recovered, the county get 5 percent of the money for it's trouble.

An agreement with Portnoff and Associates would involve "no out of pocket costs," Portnoff said, though the district would be responsible for some expenses. However, the fees would not be deducted until the district had recovered some delinquent funds to cover the expense, she said.

Each property in arrears would be sent an initial mailing at a cost of $40 plus $5 postage to the school district. The fee, along with any other fees or expenses that may be accrued, is passed on to the delinquent taxpayer, and the district recoups the cost of those fees when the taxpayers make their payments. With about 734 property owners that would get the mailing, the district's liability would be about $35,000 before funds are recovered, officials estimated.

“So it's not totally not out-of-pocket,” board president Michelle Cann said.

Other members expressed concerns, while some seemed favorable to the idea.

“As wonderful as anyone's services may be, I question how much more money we can get. $500,000 seems unrealistic,” board member Loretta Leeson said.

“I just can't believe we're fighting over a way to get more revenue,” said board vice-president William Burkhardt. “If we don't like it, we can stop after a cycle.”

“Why is it coming to us two weeks before a decision is to be made? I'm not going to be pressured.” Leeson countered. “We've had months.”

“If this can get us even $20,000 for free, we'd be stupid not to take it,” said member Michael Faccinetto.

“If it's a matter of $20,000, are we going to switch auditors or legal counsel, on only the recommendation of one member of administration?” asked Tenaglia.

In the end, the district directors asked the administration to acquire other bids for similar services, compile a history of the district's efforts to collect delinquent taxes, and estimate the potential costs and benefits of Portnoff's services and others like it.

The matter will likely be revisited at the next finance committee meeting in May, officials said.

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